Delsing Canning Company is considering an expansion of its facilities. Its current income statement is as follows:

Sales	$	7,300,000
Variable costs (50% of sales)		3,650,000
Fixed costs		2,030,000
Earnings before interest and taxes (EBIT)	$	1,620,000
Interest (10% cost)		660,000
Earnings before taxes (EBT)	$	960,000
Tax (40%)		384,000
Earnings after taxes (EAT)	$	576,000
Shares of common stock		430,000
Earnings per share	$	1.34

The company is currently financed with 50 percent debt and 50 percent equity (common stock, par value of $10). In order to expand the facilities, Mr. Delsing estimates a need for $4.3 million in additional financing. His investment banker has laid out three plans for him to consider:

1. Sell $4.3 million of debt at 13 percent.
2. Sell $4.3 million of common stock at $25 per share.
3. Sell $2.15 million of debt at 12 percent and $2.15 million of common stock at $40 per share.

Variable costs are expected to stay at 50 percent of sales, while fixed expenses will increase to $2,530,000 per year. Delsing is not sure how much this expansion will add to sales, but he estimates that sales will rise by $1 million per year for the next five years. Delsing is interested in a thorough analysis of his expansion plans and methods of financing.He would like you to analyze the following:

a. The break-even point for operating expenses before and after expansion (in sales dollars). (Enter your answers in dollars not in millions, i.e, $1,234,567.)

b. The degree of operating leverage before and after expansion. Assume sales of $7.3 million before expansion and $8.3 million after expansion. Use the formula: DOL = (S TVC) / (S TVC FC). (Round your answers to 2 decimal places.)

c-1. The degree of financial leverage before expansion. (Round your answer to 2 decimal places.)

c-2. The degree of financial leverage for all three methods after expansion. Assume sales of $8.3 million for this question. (Round your answers to 2 decimal places.)

d. Compute EPS under all three methods of financing the expansion at $8.3 million in sales (first year) and $10.1 million in sales (last year). (Round your answers to 2 decimal places.)